Which of the following would not be an expected response from a decrease in the price level and so help to explain the slope of the aggregate-demand curve?
A)When interest rates fall, In-and-Out Convenience Stores decides to build some new stores.
B)The exchange rate falls, so French restaurants in Paris buy more Kansas beef.
C)Tyler feels wealthier because of the price-level decrease and so he decides to remodel his kitchen.
D)With prices down and wages fixed by contract, Fargo Concrete Company decides to lay off workers.

Question

Quizplus · Accepted Answer

A decrease in the price level would generally lead to an increase in consumption and investment due to lower interest rates and increased real wealth, and it could improve a country's trade balance by making its exports cheaper. However, it would not typically cause companies to lay off workers due to lower prices and fixed wages; instead, companies might increase production to take advantage of lower costs and increased demand.

Which of the Following Would Not Be an Expected Response